A boost for the Ukrainians – and a problem

The successful missile attack on the Russian arms depot on the Crimean Peninsula was a major boost for the Ukrainians. It may also have created a major problem.

So far the Ukrainians have refrained from attacking Russian territory. This is a bit like fighting with one hand tied behind the back, but they have been told by their NATO quartermasters to restrain themselves due to a fear of provoking an escalation that would result in NATO and Russian troops facing each other in a possible World War Three scenario.

Donetsk and Luhansk are not Russian territory. They are—according to the Russians—independent sovereign republics which have seceded from Ukraine with Russian help. Crimea, however, is a different kettle of fish. The Russians annexed it in 2014. It matters not that only 14 countries have recognised the annexation. Russia regards Crimea as Russian and therefore the attack was on Russian territory.

Interestingly enough, the Ukrainian government is refusing to take credit for the attack. It is not denying responsibility either.

Meanwhile concern is growing for the safety of the Zapororizhzia nuclear power plant. The Russians continue to use the plant as a base from which to launch artillery and missile barrages and there are reports that technicians at the plant are being forced to work at gunpoint. The International Atomic Energy Agency is still trying—unsuccessfully–to gain access to conduct safety inspections and UN Secretary General Antonio Guterres has called for a demilitarised zone around the plant.

How are sanctions affecting Russia?

Are sanctions against Russia working? A bit, but not enough. The latest figures out show that the economy shrank 5.7 percent in the second quarter of 2022, slightly more than the first quarter drop so that the total shrinkage for 2022 is ten percent.

There appears to have been nil impact on the energy sector. Any drop in the quantity of oil and gas exports has been more than accommodated by a rise in prices. Manufacturing has been hit by a drop in imports of components, but Russian industrialists appear to be discovering work arounds.

The big hit has been on the service industries, especially financial services with overseas connections. Inflation, however, could be a bigger long term problem for Putin. It is currently running at 17.5 percent and rising.

Of course, his European and American opponents are suffering as well. The US economy grew at only 0.5 percent in the second quarter and this was after shrinking 1.6 percent in the first. Germany is hanging in there with 1.4 percent growth in the first quarter of 2022. Inflation in Europe and America has either hit double figures or will within weeks or months. Britain is one of the worst hit with a recession predicted for all of 2023. Its unions are lining up for industrial action.

But spare a thought for other parts of the world. Turkish inflation is at 79.6 percent and expected to reach three figures by next year or earlier. Argentina is 70 percent, the worst in three decades. The outlook for the developing world is bleak to stark.

Stagnation and contraction in the developed economies means a shrinking market for their goods; less money for investment and cuts in aid. Hungry bellies leads to social unrest. The World Bank and IMF have identified 40 countries where disturbances could break out next year as a result of failing economies.

Drought in Europe

Europe is suffering a drought. Some meteorologists are predicting that it will last until October. If so it could go on record as the worst drought in 500 years, and the damage to the economy will be devastating to a continent already reeling from the 2008 banking crisis, the coronavirus pandemic, Ukraine war, supply chain bottlenecks. Inflation, and energy shortages.

Water is so much more than something which used to make tea, water the plants and bathe. It is vital to a whole range of industries.

In fact, it is estimated that only 11 percent of water is used for household purposes. The bulk of it, 70 percent, goes to agriculture, both crops and livestock. Nineteen percent is used by industry with the big users being steel, mining, chemicals, paper, power generation and, of course, the drinks industry.

Water is also a vital component of Europe’s transport network. The continent has a large complex of rivers and canals along which moves millions of tons of goods. The Rhine and Danube alone carry 50 million tons of goods on nearly 2,000 vessels. Dropping water levels have made this rivers virtually commercially useless.

German Chancellor’ on Ukraine, the economy and his predecessor

Angela Merkel started it and her successor as German Chancellor, Olof Scholz, has continued the tradition of a summer press conference before disappearing for his annual holidays.

This year’s Berlin event focused on Ukraine, energy, economic problems and the pro-Russian activities of one of his predecessors, Gerhard Schroeder.

Scholz was slow to jump on the “we love Ukraine” bandwagon, but now he is fully on board with military and political support. The invasion of Ukraine is a war crime and Putin is a war criminal,” he told reporters.

Scholz promised tax relief for those hit by inflation and denied that the country’s economic problems would lead to civil unrest. The German Chancellor said that as part of the government’s efforts to diversify energy supplies it was proposing a gas pipeline to Portugal through France and Spain.

Scholz was diplomatically circumspect about Schroeder who is under attack for his pro-Russian position. The former chancellor was instrumental in negotiating the Nordstream 2 pipeline which has now been blocked, is a director of Gazprom and recently met with Vladimir Putin. His solution to the energy crisis? Open Nordstream 2.

* Tom Arms is foreign editor of Liberal Democrat Voice and author of “The Encyclopaedia of the Cold War” and “America Made in Britain". To subscribe to his email alerts on world affairs click here.